Once again, the bullish consensus is tightly grouped with the expectation that the S&P 500 will close the year at 1550-1615 (up from 1425 at the close of 2012) and that the 10 year U.S. note yield will trade at 2.50% or higher (up from 1.80% at the close of 2012).

These consensus views might prove too optimistic on stock prices and too pessimistic on bond prices. I believe that the U.S. stock market will make its 2013 high in the first two weeks of January, be in a yearlong range of 1275-1480 and close the year at 1425 and that the 10-year U.S. note will be below 2.00% in the first six months of 2013.

Kass cites the following reasons for his bearish outlook:

No meaningful spending or entitlement cuts will be made;

Unsustainable and diminished value of fiscal and monetary policy;

An aging recovery and aging stock market;

Investment narrative shifts to the earnings cliff and to the end of profit margin expansion;

A market that starts the year at reasonable if not high valuations relative to headwinds;

Full-year estimated S&P 500 range of 1275-1480 with a close of 1425; and

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